Amazon.com hits profitability

Online retailer Amazon.com has finally hit profitability, exceeding its own targets, surprising many analysts, and lifting the tech sector.

Online retailer Amazon.com has finally hit profitability, exceeding its own targets, surprising many analysts and lifting the tech sector. The company reported a net profit of $5 million for the fourth quarter of 2001. It was the first time the company had shown a profit in its six year history.

The quarterly results were make-or-break for Amazon.com founder and CEO Jeff Bezos. He had promised that the company, which began operations in 1995, would post at least a pro forma profit, a simple ‘on-paper’ profit in Q4. However, record sales of $1.12 billion for the fourth quarter pushed the company into a net profit of $5 million.

“We're incredibly happy,” said Bezos. “It really was driven by lower prices for customers in the fourth quarter. There are two types of retailers: those that work hard to raise prices and those that work hard to lower prices. Though both models can be successful, we've decided to relentlessly follow the second model.”

Amazon still made an overall loss for the year of $567 million, but this was down from $1.4 billion in the previous year, and the company believes it is on track for an operating profit of $300 million in 2002. It also still has outstanding debt of some $2.2 billion

Amazon’s international subsidiaries, in the UK, Germany, France and Japan also improved their results, with the British and German sites also posting a pro forma profit.

Wall Street reacted well to the news, with Amazon’s share price climbing 20% on the day, up to $12.